alright so as long as we're talking stocks... anyone wanna sell me on a compelling overarching narrative of how money moves around in the world? this is something i've wanted to understand since learning about crypto. where is it (mostly)? who decides where it goes (mostly)? etc
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the first step is defining "money"
this is actually very difficult and there is a lot of debate on this topic
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yes this is part of what i want a compelling narrative about! is most of the "money" tied up in stocks or bonds or even more arcane financial instruments? how does fractional reserve banking and fiat currency tie into it? etc etc
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what does it mean for money to be tied up? after all, you don't "tie up" money in a stock: you buy the stock from someone, who now has the money instead of you, for example
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yeah so this sort of shit confuses me a lot. i have the impression that it's common to count stocks as part of e.g. net worth but like... what's up with that? lemme see if i can articulate my confusion about this more precisely
so, suppose i tried to tally up the net worth of every single person, whatever that would mean, and in addition to their liquid cash and bank accounts also included the value of their stocks, bonds, property, other stuff like that. aren't i... double-counting in a sense?
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when talking economics it is important to distinguish between money and things
this is part of why capitalism makes things so complicated; the presence of complex financial instruments makes things much blurrier than it would otherwise be
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under a simpler financial system, you would simply have two types of objects
things (resources, like hamburgers or an hour of work)
and money (medium of exchange)
the money has no value on its own and exists solely to allow people to trade resources
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